Tech Stocks Erased $1 Trillion In Value Friday As Investors' AI Doubts Surge

The negative pressure on tech stocks, which caused a $1 Trillion value loss on Friday, is coming from several directions. 

Externally, a rise in interest rates, fueled, in part, by the cost of oil and gas, is raising borrowing costs for AI companies who evidently thought it was sorta like free money because it wasn't equity. But the reality is that it is making their debt much more expensive just at a point when a plurality - and possibly a solid majority - of investors are beginning to ask very serious questions about how and when it can be paid back, let alone generate a return. And this is coming just as investors are also raising concerns about the rising cost and numbers of data centers, or even whether they are really necessary. All of which is putting additional pressure on the Federal Reserve to raise interest rates further, which will exacerbate the problem. And, for the first time, the specter is being raised of a pre-midterm election October surprise being a market crash. JL

Steve Kopack reports in NBC:

Tech stocks shed more than $1 trillion in value Friday. The sharp drop in tech shares came as worries about ballooning debt, high interest rates and rising oil prices resurfaced. At the same time that inflation pushes interest rates higher around the world, trillion-dollar tech companies are borrowing and spending hundreds of billions of dollars to develop AI and build their vast data centers. Fresh cracks began to show in the AI business model, as investors raised questions about when their massive injections of cash into AI companies would pay off. The two worst performing stocks in the Nasdaq 100 on Friday were both data center companies: Nebuius and CoreWeave. The latter’s shares plunged more than 25% over the past month. These companies are just two of the dozens that have borrowed billions of dollars at high interest rates to expand at a breakneck pace.

Starlink Reliability As Brand Irreparably Damaged By Trump-Musk Ukraine Cutoff

After the Trump-Musk mafia-style reduction of Starlink capabilities this week to suit their own personal interests, no government - whether

dictatorship or democracy - nor any business wanting to protect its own operational and financial interests is going to allow itself to become dependent on a system controlled by the whims of self-serving oligarchs and politicians.

The result will be a dramatic increase in new offerings which offer the same service with less political risk. Musk  suggested this bullying to protect his own dependence on US government contracts which have increased under Trump. Trump is trying to buy Putin's illicit support for his own future, at least partially threatened by the Democrats' midterm election results. But whoever gave the order - and reports indicate it was collaborative between the two, it has signalled the beginning of the end of Starlink's dominance. JL

Mark Urban reports in The Times of London:

The slowdown of the Starlink system has underlined the degree to which Ukrainian military forces depend on American satellites. It also highlighted that other western militaries are similarly at risk. Whoever the order came from, the biggest lesson for both Ukraine and western countries trying to modernise their armed forces is that Musk’s SpaceX has capabilities giving the US, for now, unique leverage. The experience has left militaries wondering how to reduce their dependence on this American technology. The UK made an investment of £374m seven years ago in a system called OneWeb, which is independent of Trump and Musk, and the UK can now make use of its 650 satellites. The French firm Eutelsat (also) invested in it, so it provides a European alternative to Starlink. Ukraine will now make increased use of OneWeb.

How Ukrainian Soldiers Fight and Survive in the Kill Zone

The front has become an outmoded concept. There is now a miles wide gray zone, loosely held by small groups of infantry supplied by drones. It is also a kill zone, where to move is to die, spotted and then dispatched by ever watchful drones. 

Living conditions are primitive. Lengths of deployment are mind-numbingly long due to the threat of detection and the difficulty of insertion and extraction. But still the Ukrainian troops hold. JL

Constant Meheut and colleagues report in the New York Times:

Six months in the kill zone: holed up in a half-destroyed house. They could hear drones buzzing overhead nonstop. To avoid detection, they relieved themselves in bags rather than step outside; slept pressed together in winter rather than light a fire; and dragged the bodies of Russian soldiers they killed into their house, so drones  would not detect signs of With vehicles unable to reach the front, food and water were dropped by drones. The drops sometimes failed, leaving them hungry and thirsty. Units could only fly in medicine. For soldiers badly wounded and in need of evacuation, the only option was a robotic ground vehicle.. Moving is the most dangerous thing a soldier can do in the kill zone. The front has blurred into a miles wide wasteland and has become so fuzzy that opposing troops sometimes shelter in the same building.

For 2nd Time In 2 Weeks, Ukraine Tanks Attack, Are Hit - and Survive

Call it proof of concept: for the second time in two weeks, Ukrainian tanks attacked Russian positions and survived the ensuing encounter with mines and drones. 

The key to this development is the contemporary version of combined arms warfare. The tanks and armored personnel carriers are equipped with electronic warfare defenses, hedgehog anti-drone protections and, most importantly, are accompanies by a variety of FPV, bomber and surveillance drones to fight off Russian drones as well as suppress Russian defenders. Both sides are learning from this, but Ukraine's first mover advantage provides additional benefits in the context of its continued success across multiple sectors. JL

David Axe reports in Trench Art:

For  the second time in two weeks, Ukraine's 475th Assault Regiment has demonstrated how armored vehicles can fight and survive on a battlefield buzzing with enemy drones. The regiment encased a tank and an American-made M-2 Bradley infantry fighting vehicle in metal frames and welded hundreds of metal spines onto those frames, transforming them into "hedgehog" vehicles. They fought in mixed ground-air "combined arms" formations. The tank and fighting vehicle provided the firepower. Escorting drones provided the aerial protection and lend the hedgehogs situational awareness. Vampire drones drop grenades to suppress Russian positions, clear mines and Russian drones. FPV drones intercept the Russians' own FPV drones as they zoom in to strike. The vehicles repeatedly came under attack from Russian FPVs  but their armor held—and both vehicles survived.

As ,com Revealed, Adding .ai To Brand Name Is Not Long Term Benefit

Just as in the dotcom era, adding .ai to your brand can produce some short term financial benefits, but long term gains will prove elusive as some companies who made that move are already seeing their stock value and market share disappearing. JL

Anthony Lopopolo reports in Quartz:

At least 27 companies have renamed themselves or announced an AI focus since 2023, and their combined stock market value more than doubled at the peak. Small companies made the same move with ".com" in the late 1990s, and their shares jumped. (But) shareholders who held those stocks afterward watched most of their money disappear, and anyone who owns an AI renamer today risks the same loss. 95 companies that took internet names between June 1998 and July 1999, saw their stocks rise 72% more than those of similar small companies without .com. Then, the Nasdaq fell 77% from its March 2000 peak to October 2002 and didn't set a new record until April 2015. Today's AI rebrands are getting the same quick reward, and some are already giving it back. By the end of September, the 27 .ai companies had lost more than half of their peak value, and seven were worth less. Shareholders fared even worse in an earlier rush to rename companies after blockchain.

Ukraine's Most Underrated Military Advantage Is Leadership

Much has been written about Ukraine's capacity for innovation and the results it has produced from drones to missiles to electronic warfare. 

But Ukraine's key strategic advantage over Russia may be the quality of its leadership, from the office of the presidency to the officers in staffs and on the ground who have learned the hard way how to assess the right troops and weapons, then apply them at the right time, in the right place and in the right way. JL

David Deptula reports in Forbes:

Military  effectiveness is determined not simply by weapons, but by the quality of the decisions governing their employment. Ukraine has found ways to outthink, out plan, and outperform its opponent. Equally important is the integration of military capabilities: airpower, land and maritime forces, intelligence, space, cyber, electronic warfare, and logistics contribute to using the right force at the right place at the right time. The measure of success is not how many targets are destroyed or how much ground changes hands but that military actions achieve operational and strategic objectives. Operation Vivaldi, conducted by Ukraine’s 3rd Corps, offers is instructive. The emphasis was on creating favorable conditions before committing forces, reducing the delay between recognizing a problem and acting on it. The results validated the importance of focusing military operations on achieving strategic effects rather than destruction for its own sake.

Russians Surrender En Masse as Ukraine Applies Lyman Tactics To Kharkhiv Salient

Applying the same strategy and tactics that worked in the Lyman sector during Operation Vivaldi, Ukrainian forces in Kharkhiv oblast cut off a Russian salient and then either eliminated or accepted the surrender of the Russian troops trapped therein.

This template now seems broadly applicable to other Russian advances, in large measure because the Russians prefer to get credit for gains, so are not careful about protecting their flanks and thus create new vulnerabilities. JL

RFU News reports:

Russian troops attempting to complete the encirclement of Ukrainian defenses north of Kharkiv increasingly found themselves stranded inside Ukrainian-controlled or contested territory as Ukrainian drone operators concentrated on disrupting Russian logistics. Without reinforcements, an infiltration remains an isolated position rather than a sustainable breakthrough. Realizing they were surrounded by Ukrainian observation and facing further attacks, the Russians surrendered. Russia’s strategy depends upon establishing positions faster than Ukraine can eliminate them, but systematic Ukrainian interdiction is reversing that calculation and trapping the Russian infiltrators